System and Method for Wagering-Based Transferable Financial Instruments

ABSTRACT

An apparatus for providing a financial instrument comprises a memory operable to store a plurality of predefined states wherein each of the predefined states corresponds to at least one potential outcome of a probabilistic event. The memory further stores a plurality of predefined termination criteria wherein each predefined state corresponds to at least one predefined termination criteria. The memory further stores a financial instrument that is allocated a value based at least in part upon one of the plurality of predefined states. A processor is coupled to the memory and facilitates the transfer of the financial instrument.

CROSS REFERENCE TO RELATED APPLICATION

This application is a continuation of U.S. patent application Ser. No.10/654, 280 filed Sep. 3, 2003, and this application is related to andclaims the benefit of U.S. Provisional Application No. 60/459,692, filedApr. 2, 2003, and Provisional Application Nos. 60/460,540 and60/460,537, both filed Apr. 4, 2003, and all are incorporated in theirentirety herein by reference.

TECHNICAL FIELD OF THE INVENTION

The invention relates generally to the fields of gambling and financialinstruments. More particularly, the invention relates to providingsystems and methods for transforming propositions or positions in gamesof chance or skill (or mixed games of chance and skill) into tradablefinancial instruments that can be tracked over time and valued by aplurality of players or investors. The invention thus provides a systemand method for creating wagering-based transferable financialinstruments, and further provides a system and method for the exchangeof those instruments and settling of all claims associated with thoseinstruments.

BACKGROUND OF THE INVENTION

Wagering in casinos and on sporting events is a large and growingindustry throughout the world. Various types of betting products andsystems exist that facilitate betting on the outcome of a particulargame. For example, a patron in a casino may bet on a single hand ofblackjack, a pull on a slot machine, a roll of the dice, etc. Typicalhorse racing bets allow bettors to wager on a single horse or on severalhorses in a particular race or series of races. For instance, a bettorcan wager on a particular horse to finish first (win), finish in the toptwo (place), or finish in the top three (show). A bettor may also makevarious combination bets with multiple horses, such as an exacta bet(covering the top two horses in order) or a trifecta bet (covering thetop three horses in order). In addition, a bettor may bet on a series ofraces, such as the daily double (winners of two consecutive races), thepick-three (winners of three consecutive races), and the pick-six(winners of six consecutive races).

Those betting on other sports may wager, for instance, on variousaspects of the outcome of a particular game, including the winning team,the point margin by which that team wins, the combined final score ofboth teams, and so on. Wagers of this kind are generally well-known andunexceptional. Games or events (the terms “games” and “events” are usedinterchangeably to connote some probabilistic occurrence) upon whichwagers may be placed may be viewed as games of pure chance (e.g., a cointoss or roulette wheel spin (assuming the game is a “fair” one with nointervening human or mechanical influence skewing mathematical randomdistributions of outcome)); games of mixed skill and chance (e.g.,blackjack or horse racing); or games perceived of as consisting of pureskill (e.g., soccer, chess). All these games and events are believed tobe at least somewhat probabilistic in nature. That is, there is morethan one possible outcome that is not preordained. Even in games thatare perceived as games of pure skill, it is believed that an effectivelyrandom element (based on, e.g., weather conditions, unforeseen playerinjuries, etc.) is almost always present.

Slot machines or other machines for player-initiated games of skill orchance (sometimes referred to as, or including video lottery terminalsor video poker games) are becoming increasingly common fixtures innumerous jurisdictions across North America and elsewhere throughout theworld. Conventional slot machines have one or more “pay lines” by whichto determine whether the spin is a winning one. With each spin,different symbols appear on three or more reels (such as cherries,oranges, bells, or sevens). Preset combinations of symbols on the payline return predetermined amounts to the player (e.g., three cherriesmay pay five times the amount wagered). Each spin of the reels generallyrepresents one separate wager.

Most betting systems of the prior art are similar to a pull on a slotmachine or a single hand of black jack in that they are based on theoutcome of a single event or game—a “one-off transaction.” An exceptionmay be found in certain progressive or “jackpot” slot machine systems,but there are generally few means by which a player may take a bettingposition regarding the outcomes over time of a series or plurality ofevents that may or may not be related.

SUMMARY OF THE INVENTION

The invention herein disclosed is a system and method for structuringand facilitating the exchange of wagering-based transferable financialinstruments that embody a betting position. The financial instrument maybe traded, purchased, or sold during the lifetime of the underlyingwager(s). The system and method further provide for the settling of alltransactions and arbitration of all disputes associated with theexchange of any wagering-based transferable financial instruments. Morespecifically, the invention may be used to facilitate betting on thecombined outcomes of a plurality of predefined probabilistic events(including events previously viewed as one-off events). This isaccomplished by first establishing a market for the wagering-basedfinancial instruments. The value of each financial instrument willinitially be represented by its initial purchase price. Over time, thisvalue will change and be subsequently represented by a position whichreflects the outcomes of the plurality of probabilistic events whichunderlie each financial instrument.

The probabilistic events may generally be some traditional gambling orsporting events (e.g., casino-type events (slot machines, roulette),horse races, bingo, etc.), may be based on financial markets, or may bebased on any other series of events having uncertain or partiallyuncertain outcomes (i.e., where any combination of chance/skill is thedeterminative, and not-entirely-predictable, basis for the outcome ofsuch event(s)). The value of the instrument will necessarily fluctuateover time in accordance with the outcomes of those various events in amanner analogous to that observed for the market fluctuations commonlyassociated with derivatives trading. The instrument may be transferred,purchased, and sold, in much the same way that common stock may betransferred.

The creation of such financial instruments and positions may take placeas an addition to, or in tandem with, the player's own “one-off” wager.That is, the individual wagerers as to the one-off events could benon-participants in, and may even be unaware of, the market generated ininstruments based upon their particular one-off outcomes. Alternatively,the players could be partially or fully involved or invested in thefinancial instrument derived from the combination of their one-offwagers. This means that individual bettors could be dually and activelyengaged in the “one-off” wager as well as the financial instrumentderived from the outcomes arising from the plurality or series ofone-off wagers.

One possibility that flows from this arrangement is that sophisticatedparticipants would be able to continually adjust their overall riskparticipation or exposure—for instance, by betting one way in anindividual one-off transaction and taking the opposite position withrespect to the outcomes of the plurality of otherwise one-off events.For example, a participant might first wager that the House will winover 60% of all hands of blackjack played at a given blackjack tableover a period of six hours. However, this same participant may attemptto mitigate the risk associated with his wager by actually attempting toplay against the House in an individual game of blackjack during the sixhour period at the given blackjack table, or perhaps by placing a secondwager that the next player to play against the House during the six hourperiod will win at the given blackjack table. Such blendedrisk-participation strategy allows participants effectively to balanceor “hedge” at a sophisticated level their betting portfolio in a mannersimilar to an investor hedging an investment portfolio by offsettingtrading in the derivatives' underlying securities.

The present invention's system for structuring and facilitating theexchange of all such wagering-based financial instruments may alsoprovide background and statistical information that individuals willfind helpful not only in originally formulating their positions as tovarious betting-based financial instruments, but in any attempts tovalue their individual financial instruments or hedge their completebetting portfolios.

An important difference that distinguishes the present system fromprevious ones based on traditional derivative trading is that a client'ssuccess or failure will not be as heavily reliant on any putative orsingular “value” underlying a one-off transaction or a series of one-offtransactions. While the return to a trader of a traditional derivativeproduct is, in many cases, largely determined by the value of theunderlying security, asset, liability, or claim on which the derivativeis based, the return to an investor in the financial instruments of thepresent invention can be made more dependent on functions of chance,which can be insulated from the occasional and rare systematicfluctuations which can be attributable to specific market participants.

Thus, the system creates a semi-autonomous pecuniary market where noneis believed to have previously existed, producing novel financialinstruments that are subject to both principles of market demand and thewhims of man. Moreover, the system facilitates the exchange of thesehitherto-unknown financial instruments between and among clients and thesystem itself.

In one exemplary embodiment of a system according to the presentinvention, a method for facilitating a wager on a position with respectto the outcomes of a plurality of events is provided, and includes thesteps of establishing a “point” value, receiving order data from a firstclient regarding the wager, determining a position based on at least oneof the order data or information regarding the plurality of events, andproviding a financial instrument that represents the position. Otherembodiments include additional steps for matching a bid and offer tofacilitate the transfer of the financial instruments, and fortransmitting and displaying data related to valuations for the financialinstruments.

In another exemplary embodiment of a method according to the presentinvention, a system for creating a transferable financial instrumentbased on a position regarding the outcomes of a plurality of events isprovided, and includes a data storage, a monitoring device formonitoring the outcomes of at least one of a plurality of events, and aprocessor coupled to a memory. The processor is operable to receiveorder data from a client regarding a wager, establish a position for theclient based on the received order data, record information related tothe plurality of events, identify fluctuations in the value of theposition based on the information related to the plurality of events,and transmit data regarding the value of the position.

In yet another exemplary embodiment of a method according to the presentinvention, a system and market for trading wagering-based financialinstruments is provided. The market includes at least one financialinstrument that embodies a position with respect to a wager regarding aplurality of events which occur over a period of time, at least one bid,and at least one offer, wherein at least one bid is matched with atleast one offer, resulting in a transfer of the financial instrumentfrom a first owner to a second owner. Electronic platforms for tradingof such instruments are also provided.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 depicts a system block diagram for creating, trading, andsettling a wagering-based financial instrument in accordance with oneembodiment of the present invention.

FIG. 2 depicts information stored for wagering-based financialinstruments.

FIG. 3 depicts one embodiment of a method of creating, trading, andsettling a wagering-based financial instrument.

FIG. 4 depicts a functional block diagram illustrating one embodiment ofthe present invention in operation.

FIG. 5 depicts a graph of three potential outcomes that may arise duringthe course of one relevant wager (therein dealing with roulette spins).

Throughout the FIGS., the same reference numerals and characters, unlessotherwise stated, are used to denote like features, elements,components, or portions of the illustrated embodiments. Moreover, whilethe present invention will now be described in detail with reference tothe Figures, it is done so in connection with the illustrativeembodiments.

DETAILED DESCRIPTION

FIG. 1 illustrates one embodiment of a system 5 that includes clients 10coupled to a central controller 50 using one or more interfaces 20 and acommunication network 30. Central controller 50 is further coupled toone or more event generators 60. In general, system 5 provides for thecreation, trading, and settling of wagering-based financial instruments76.

Financial instruments 76 are derived from a wager that is made withrespect to the outcome of one or more probabilistic events. The types ofprobabilistic events that can be used as the basis for creatingfinancial instruments 76 are multitudinous. For example, numerous formsof traditional gambling events may be the subject of financialinstruments 76. These events may include “one-off” events in which abettor traditionally places a single wager on a single intermediate orfinal outcome such as wagers based on the spins of slot machines,outcomes of roulette games, craps games, bingo games, blackjack hands,results of horse races, and so on. Note that the present invention isnot limited to deriving financial instruments 76 from wagers on purely“one-off” events, as there are many known wagers requiring tracking of acombination of outcomes, e.g., daily double racing bets or sports parlayor “teaser” bets, all of which could also be used to construct derivedfinancial instruments 76.

Additionally, numerous other events may form the basis for financialinstruments 76, including events associated with the financial markets,television shows, and even the weather. For example, with respect tofinancial markets, the events might involve the movement or the value ofa financial market index, security, or other instrument, referred togenerally as a financial market indicator, during or at the end of apredetermined period of time or after one or more relevant transactions.Outcomes for these events might involve, for example, whether a certainfinancial market index, such as the Dow Jones Industrial Average (DJIA)or the Financial Times Stock Exchange (FTSE), will rise or declineduring the upcoming seconds, minutes, hours, or other predeterminedperiod of time, or after one or more relevant transactions. The indexmay be rounded to the nearest whole point (e.g., an average of 9,314.62may be rounded up to 9,315), trade in whole points, and in the event theindex stayed at the same level, the wager could be deemed either a lossor a tie.

In particular embodiments, the movement of a financial market indicatormay be graphically represented on an electronic screen associated with abuyer or seller of financial instruments 76 using symbols such as, forexample, color coded (e.g., red, green, or yellow) arrows. Each symbolcould indicate that the value of the associated financial marketindicator was down during the last predetermined period of time or afterthe last relevant transaction or transactions (e.g., red down arrow); upduring the last predetermined period of time or after the last relevanttransaction or transactions (e.g., green up arrow); or unchanged duringthe last predetermined period of time or after the last relevanttransaction or transactions (e.g., yellow sideways arrow). Any suitablenumber and combination of symbols could combine to represent a suitableportion of the history of the movement of the value of the financialmarket indicator. Financial instruments 76 may be based upon underlyingwagers associated with the movements of a financial market indicator orthe graphical representations associated therewith. For example,underlying wagers could be that all symbols in a series will be one ofred, green, or yellow arrows; that the symbols of a series will be aparticular number, combination, or ordering of red, green, and yellowarrows; that a particular symbol in a series will be one of a red,green, or yellow arrow; that the next symbol will be one of a red,green, or yellow arrow; etc.

Other outcomes to these events might involve whether the value of theindicator will be an odd or even number at the end of a predeterminedperiod of time or after the last relevant transaction or transactions.Further outcomes might involve whether the value of the indicator willfall within particular ranges of numbers at the end of a predeterminedperiod of time or after the last relevant transaction or transactions.These events and outcomes form the basis for transferable financialinstruments 76. Wagering on the movement of the financial markets or thevalue of the financial markets, and the transferable financialinstruments 76 derived therefrom, could be based upon fixed oddspayouts, spread betting payouts, or other forms of payouts.

In another example, with respect to television shows, the events mightinvolve whether or not a first participant of a reality-based televisionshow will select a second participant of the show for marriage, toremain on the show, to be excluded from the show, or to otherwise beinvolved in the show. In another example, the events might involve theperformance of a participant with respect to voting by viewers of theshow. In particular, the events might involve whether a participant willreceive the most or fewest votes by the viewership during apredetermined voting period; whether a participant will receive acertain number or percentage of votes by the viewership during apredetermined voting period; whether a first participant will receivemore or less votes than a second participant during a predeterminedvoting period; or voting on whether an incident, occurrence, orhappening should take place on the show. In other examples, the eventsmight involve whether or not a participant of a game-show will answer aquestion correctly, win a prize, or otherwise succeed or fail on theshow. The event(s) that can form the basis for financial instruments 76are therefore any event or concatenation of events, the outcome of whichis not certain at the time the proposition is being evaluated.

Financial instrument 76 may take many forms. For example, financialinstrument 76 may be a paper instrument, an electronic instrument, orsome other concrete, virtual, or notional embodiment that representsownership of or an interest in the underlying wager. Over time, thevalue (or perceived value) of an instrument 76 may change based onnumerous factors, including outcomes of some of the plurality of eventswhich form the basis of the instrument 76, or outcomes of other relatedevents that may affect the outcome of the wagered position. “Value” inthis context is defined, generally, as including principally the amountthat an interested buyer would pay a willing seller in order to assumecontrol of or an interest in an instrument 76. Determination of anyabsolute “value” beyond this definition is not required for practice ofthis invention.

The value of a financial instrument 76 may track the outcomes of itsunderlying events according to a “point system” whereby positive ornegative points are assigned to various outcomes of events and theoverall point value for the event is updated as the event or eventsprogress. For example, a “point” may be created for subsequent wageringbased upon the numerous spins of the reels on slot machines, roulettewheels, or other games of chance located at a casino facility. As aparticular financial instrument 76 may be based on a plurality ofdifferent types of events, the value of a financial instrument 76 maytrack a “blended” point value. For example, a blended point value βcould be based upon a mathematical function (β=an+bp) of two or morevariables, n and p, wherein n is a sub-point based upon outcomes of afirst type of underlying event (e.g., slot machine pulls) and p is asub-point based upon the outcomes of a second type of underlying event(e.g., roulette wheel spins).

Moreover, financial instruments 76 may be bought, sold, exchanged, orotherwise transferred using system 5. For example, financial instruments76 may be traded through electronic transactions and platforms via theInternet and/or over various wireless connections. Financial instruments76 could also be traded using paper certificates, through tokens, smartcards, tote boards, virtual wallets, or any other known system fortracking, trading, redeeming, and evidencing an account, ownershipposition, or other form of valuta. Therefore, system 5 and methodsassociated therewith may not only be used to establish wagers, but mayalso be used to facilitate transactions involving the financialinstruments 76 that embody such wagers, essentially creating a market inthose wagers. The transfer of financial instruments 76 may take placeamong clients 10 and between a client 10 and a “house,” a platform,bookmaker, or some other market making participant of system 5. Forexample, a financial instrument 76 may be initially established by amarket making participant of system 5 and transferred to a client 10.The financial instrument 76 may then be transferred any number of timesamong clients 10 or with the market making participant of system 5before the financial instrument 76 is settled.

Clients 10 are various users of system 5 that may place wagers embodiedin financial instruments 76, trade financial instruments 76, and settlefinancial instruments 76. Clients 10 may also refer to the devices usedby various users of system 5. Examples of these devices include acomputer, a personal digital assistant, a cellular phone, a kiosk orpoint of sale terminal, or any other device that can display informationfrom and communicate with various elements of system 5.

An interface 20 provides a portal for clients 10 to access otherelements of system 5. In one embodiment, interface 20 comprises awireless network 21, a television network 22 (e.g., cable, satellite,closed-circuit, etc.), the Internet or other local or wide area networks23, or a casino gambling facility 24. Any suitable number andcombination of interfaces 20 may be implemented in system 5 according tousage, traffic, architecture, and other considerations.

Communication network 30 may comprise any suitable number andcombination of local area networks, wide area networks (e.g., theInternet), wireless networks, or any other type of network thattransfers data between central controller 50 and the various clients 10of system 5. All or a portion of communication network 30 may be aproprietary network. The transfer of data on network 30 may include atwo-way transfer, with data 40 communicated to network 30 and eventuallyto clients 10, and data 42 communicated to central controller 50. Data40 that is communicated to clients 10 may include such information asprices for various positions, updated values for financial instruments76, total number of wagers, payouts, spreads, over/unders, ranges, orany other information associated with financial instruments 76. Data 42that is communicated from clients 10 to central controller 50 mayinclude such information as new wager orders transmitted from clients10, requests for status information, or trading information forfinancial instruments 76.

Central controller 50 comprises a processor 70 coupled to a memory 72that may be implemented as a mainframe, a series of connectedworkstations, or in any other suitable computing environment andarchitecture. Processor 70 executes software application 74 to performvarious features and functions for creating, trading, and settlingfinancial instruments 76 described herein. Memory 72 stores softwareapplication 74, various incarnations of financial instruments 76, andinformation 78 associated with financial instruments 76. Centralcontroller 50 is coupled to event generators 60 that include slotmachines, roulette wheels, blackjack tables, or any other suitablecasino gaming applications; stock markets, bond markets, or any othersuitable financial markets; race tracks (e.g., horse, dog, auto, etc.);or any other suitable generators of events upon which financialinstruments 76 are based. Event generators 60 may be associated withvarious types of monitoring interfaces 62 that allow central controller50 to capture information associated with the occurrence of eventsforming the basis for financial instruments 76. Although the followingexample is detailed with respect to a particular type of event generator60—slot machines—it should be understood that system 5 operates withrespect to any suitable type, number, and combination of eventgenerators 60.

Processor 70 may gather information from actual slot machines located inlive or simulated casino facilities. These slot machines may be playedby users, or automatically operated as randomized “virtual slots,” inaccordance with the present invention. The outcomes of the respectivefinal reel positions of the slot machines after each “pull” may betransferred to central controller 50 using different types of monitoringinterfaces 62. For example, the machines may be recorded via live videoand the data extrapolated from the video feed through a variety ofmanual or automated techniques. Alternatively, and advantageously, theslot machines themselves may be mated to monitoring equipment, whichtransmits the outcomes of each pull event to the central controller 50electronically.

In alternative embodiments of the present invention in which the pointis defined in part by outcomes of other games of skill or chance,methods for recording outcomes may include similar electronic monitoringand transmission equipment, as well as manual input of outcomes whenappropriate. In the instance of, e.g., blackjack as the basis for apoint, card values may be recorded by automatic shape and characterrecognition in conjunction with video surveillance cameras fixed on thecard table. The prevalence of video monitoring in casinos for securitypurposes, together with known optical character and shape recognitionsoftware, provides numerous opportunities for the automation ofoutcome-gathering steps in the present invention.

Notably, the slot machines whose outcomes are used to determine a pointvalue in the above-described embodiment need not necessarily be locatedin the same facility. For example, a portion of the slot machines may belocated in one facility, and another portion of slot machines may belocated in any number of other facilities that are geographicallyremote. Furthermore, the system and method of the present invention arenot limited to any number of slot machines, and may be configured tomonitor the outcomes of hundreds or thousands of slot machines locatedin a large number of different facilities. The slot machines may belocated in any number and combination of facilities, such as, forexample, casinos, airports, racetracks, or any other suitable location.

Memory 72 of central controller 50 may store information regarding thevarious types of different wagers that may be placed and the outcomes ofvarious events. For example, memory 72 may be used to store slot machineresults from a particular casino, or even for a group of casinoscombined. Memory 72 also stores information 78 associated with eachfinancial instrument 76. Information 78, illustrated in greater detailwith reference to FIG. 2, may include Financial Instrument Number (FIN)82, a description of the event(s) 84 which are the subject of theparticular instrument 76, a designated duration 86, and the pointposition 88 (and/or price) established in the particular instrument 76.These fields (and others) may be defined in numerous ways within thescope of the present invention. For example, duration 86 may refer to aparticular closing or settlement date for the financial instrument 76,or may be based on the events themselves that may be completed on someuncertain date in the future.

One embodiment of a method for creating, trading, and settling afinancial instrument 76 is illustrated in flowchart 90 of FIG. 3.Execution begins at step 92 where a financial instrument 76 is createdbased on numerous factors, such as the events which are the subject ofthe instrument 76, the duration of the instrument 76, and the pointposition embodied by the financial instrument 76 with respect to acurrent house position. The point position embodied in the financialinstrument 76 may comprise an initial point position for the underlyingevents and may be taken into account in determining the initial value ofthe financial instrument 76. The financial instrument 76 is transferredfrom the house to a first client 10 for a determined price.

Execution proceeds to step 94 during the duration of the instrument 76,where the house monitors the events underlying financial instrument 76in order to update regularly the house point based on the outcomes ofthose events. The house point may increase or decrease according to theoutcome of various underlying events thereby affecting the value offinancial instrument 76. Such information may be broadcast to clients 10of system 5 so that they may be apprised of the changing value of theirfinancial instruments 76, and further to facilitate trading of theinstruments 76 between clients 10 based on their changing valuations.

At step 96, a sale of the financial instrument 76 from a first client 10to a second client 10 is facilitated, presumably based on some pricethat is set within the relevant “market.” This transaction may occuraccording to techniques whereby an offer price and a bid price for aparticular instrument are matched, and a sale is transacted. Though onlya single transaction of the instrument 76 is depicted in FIG. 3, itshould be understood that the instrument 76 may change hands any numberof times during its lifetime and prior to its eventual settlement.Clients 10 may buy or sell a financial instrument 76 at any time and forany amount (assuming a willing counter-party is available to pay suchamount for the financial instrument 76 at such time), and can alsoestablish pre-set stop loss and sell orders, to limit a loss or lock-ina profit. In the event the value of the financial instrument 76 reachesa level at which a client's credit is fully extended, he might beautomatically “closed out” of his position through entry of an automaticsell order.

At step 98, upon expiration of the duration of the underlying events,the financial instrument 76 is settled between the present owner of thefinancial instrument 76 and the house based upon the outcomes of theunderlying events and the wagering positions in those events which areembodied in the financial instrument 76. Any balance due to the client10 may be paid by the house, or conversely, any balance due to the houseby the client 10 may be paid to the house. Determination of the payingparty and receiving party and the amount of the payment may be madeaccording to a relation between the final value of the house point, orfinal point count, as of the expiration of the duration (as described inthe financial instrument 76) and the initial point position, or initialvalue, established in the financial instrument 76. Some or all of thesteps illustrated in flowchart 90 may be performed by elements of system5, including, for example, processor 70 of central controller 50operating software application 74.

While system 5 and its associated methods are described herein from theperspective of the “house” (e.g., of a casino, who might implement thepresent invention to create financial instruments 76 based upon gamesbeing played in its own gaming area), the present invention is notlimited to practice by the house. For instance, any party could practicethe present invention by structuring (or providing a platform or systemfor the trading and settlement of) financial instruments 76 that arebased upon, e.g., the publicly-known results of horse races at a giventrack, or based upon televised outcomes of any sporting event, wageringevent, or any entertainment event or show, such as, for example,American Idol, The Bachelor, or other reality based television shows.

Moreover, even if the present invention is assumed to be practiced bythe house, it should be recognized that the house need not necessarilybe concerned with the “accuracy” of its point-setting for particularoutcomes (and indeed, the particular point value assigned to any outcomeneed not necessarily be viewed as relating to or attempting to predictan “actual” statistical probability of such outcome), except in the casein which the house is taking a full or partial position as the“counter-party” or bank to a player or players, or undertakes to act asa “market maker” by taking a counter-position as to a player when noappropriate counter-party is available in the market. In such a case inwhich the house is taking a full or partial risk-based position, oracting as a market maker, it will wish at least to be aware of theprobabilities (statistical and/or perceived) of certain outcomes, and atleast to take those probabilities into account in conjunction withsetting point values.

In the case in which the house or other party practicing the presentinvention is not an “equity” participant in the financial instruments 76(i.e., is not acting as a bookmaker/risk-based-position holder) derivedfrom the points set as to individual outcomes, though, such a party neednot be concerned with the accuracy or statistical “realism” of aparticular point value. An analogy may be found in, e.g., commodityfutures, in which it is possible to structure a position based on theproposition that gold will trade at, e.g., $2000 an ounce six monthsfrom now. Even if this is perceived as an unrealistic “prediction” ofthe actual likely outcome of the commodities market, once such aproposition is defined, buyers and sellers may nonetheless trade in itbased upon the (admittedly-remote and unrealistic) prospects of such anoutcome, and discounting their bids accordingly.

In FIG. 4, one embodiment of system 5 is shown in operation. The processbegins at some time T₀, involving user 1 10 a and user 2 10 b (U₁ andU₂, respectively). Although only two representative users or clients 10are shown, system 5 itself is supplied with processing capability forsupporting a large plurality of participants at any given time. At somepoint during or before the interactions begin, users 10 a and 10 b willprovide a funding source of some sort, which may be accomplished assimply as by providing system 5 access to a bank account, a credit card,a house line of credit, or some other indicator of ability to pay inorder to interface with system 5.

Users 10 a and 10 b view a selection of probabilistic events 210 fromwhich to choose as the underlying basis for one or more financialinstruments 76, as indicated by arrows 217 and 218. Events 210 areassociated with event generators 60 from FIG. 1 and may include a seriesof sports events (e.g., an entire football season, every football gameplayed on a Monday night, etc.), gambling events (e.g., the outcome ofthe next 100 hands of blackjack, the number of times the roulette balllands on red over a one hour period, etc.), or arguably “random” (ordifficult-to-predict/high standard deviation) events or outcomes (e.g.,the amount of rainfall at Stonehenge on any given day, the rise or fallof a market index over any given period of time, etc.). Upon determininga selection of events 210 and establishing a wagering position thereon,the clients will communicate such wagering positions to the centralcontroller 50. Central controller 50 establishes a financial instrument76 embodying the parameters of each wagering position, and will return aconfirmation message, as indicated by arrows 219 and 220.

After each financial instrument 76 is recorded in memory 72, asindicated by arrow 216, the financial instrument 76 will remain “live”or active for the duration of the probabilistic events wagered upon. Ifthe financial instrument 76 depends on the outcome of the regular NFLfootball season, for example, the financial instrument 76 remains livefor approximately seventeen weeks. If the financial instrument 76depends on the number of aces of spades played in all hands of blackjackover the course of one day, for example, the financial instrument 76remains live for one day. Irrespective of the underlying games orevents, each financial instrument 76 will have a market life thatcorresponds with the duration of the underlying wager(s).

The value of the financial instrument 76 will likely vary with timeaccording to the push and pull of miscellaneous market forces (e.g.,supply and demand) and as unforeseen changes transpire (e.g., a starquarterback breaks his arm). For example, if user 10 a (U₁) places awager that outcome O₁ will occur at some time T₁, and user 10 b (U₂)places a wager that (a different) outcome, O₂ will occur at time T₁,each will have a stake in the cumulative outcome of some series ofevents. This stake will be embodied by a transferable financialinstrument 76 that is created by system 5. This financial instrument 76remains transferable on the system-created market for such instruments76. In other words, U₁'s stake in outcome O₁ will be embodied in somefinancial instrument 76, F₁, and U₂'s stake in outcome O₂ will beembodied in some financial instrument 76, F₂. Both F₁ & F₂ will beopenly transferable using system 5. Both the value (and, a fortiori, themarket price) of F₁ & F₂ may fluctuate with the changes in theunderlying events 210. For example, assume that O₁ and O₂ are adverseand mutually exclusive outcomes. Assume that some relevant event 210, E₁occurs at some time after the wager has been placed but before the wageris resolved. If E₁ has a positive effect on O₁, it will have a negativeeffect on O₂. This will cause the value of F₁ to rise and the value ofF₂ to decline.

Below is an exemplary algebraic representation of several of the setsthat are contemplated by an embodiment of the present invention:G = {G₁, G₂, G₃  …  G_(N)}[∃G_(N) ∈ G, ∃W] $\begin{matrix}{W = \left\{ {W_{1},W_{2},{W_{3}\quad\ldots\quad W_{M}}} \right\}} \\{O = \left\{ {O_{11},O_{12},{O_{13}\quad\ldots\quad O_{21}},O_{22},{O_{23}\quad\ldots\quad O_{\overset{.}{MN}}}} \right\}} \\{U = \left\{ {U_{1},U_{2},{U_{3}\quad\ldots\quad U_{N}}} \right\}} \\{W_{1} = \left\{ {O_{11},O_{12},{O_{13}\quad\ldots\quad O_{1N}}} \right\}} \\{W_{2} = \left\{ {O_{21},O_{22},{O_{23}\quad\ldots\quad O_{2N}}} \right\}} \\{W_{3} = \left\{ {O_{31},O_{32},{O_{33}\quad\ldots\quad O_{3N}}} \right\}} \\{\vdots} \\{W_{M} = \left\{ {O_{M\quad 1},O_{M\quad 2},{O_{M\quad 3}\quad\ldots\quad O_{MN}}} \right\}}\end{matrix}$ K = {}

The set G represents the set of all probabilistic games or events 210,or series of games or events 210 (note: the words “games” and “events”are used interchangeably to connote a probabilistic occurrence), whichany system user 10 may wager upon. For each G_(N)εG, there exists W. Theset W represents the set of all unique wagers that may be placed on anygiven G_(N). The set W may be user-defined or system-defined. The set Orepresents all possible outcomes for all possible events 210 that may bewagered upon. For each W_(M)εW, there are a series of unique potentialoutcomes. The number of potential outcomes, of course, will vary withthe nature of the event itself (i.e., the more inherently uniqueoutcomes an event possesses, the greater the number of possible wagers,and thus unique potential outcomes, that are available to be wageredupon by the user). For example, the game of roulette will provide agreater number of potential wagers and outcomes than a coin toss(W_(M-Roulette)>W_(M-CoinToss)→O_(MN-Roulette)>O_(MN-CoinToss)) The setU represents the set of all users, or clients 10, with stakes in variousoutcomes, and the set K is the master set. A unique K exists for eachuser, and is discussed fully below. Any user U, may place a wager on anyoutcome O_(MN)εO.

A user may thus observe G and the assortment of probabilistic eventsupon which any wager, W, may be placed at any time. For example, a user,U₁, may observe a roulette table (roulette being a “probabilisticevent,” G_(Roulette), contained within the set G) at any given casinovia live data (e.g., text, image, video, etc.) transmitted directly tohim. U₁ may then observe the set W_(Roulette) of all wagers that may beplaced. At this point in time, T_(o), U₁ may elect to place a wager onone (or more) unique outcome(s). For example, U₁ may wager that over thecourse of the next five hour period, over 90% of the roulette tablespins will result in the roulette ball falling on a red roulette tile.This outcome could be denoted O₁₁. O₁₁ is certainly an outcome (althoughfor purposes of illustration, an admittedly unlikely one) within thepotential set of outcomes that exists—and the outcome may be correlatedwith a payment scheme that attempts to reflect, in various ways, therelative riskiness of the specific position undertaken.

At time T_(o), when the wager is originally made, the wager itself isworth no more or less than what U₁ paid to place the wager (even thoughthe wager may bear “long odds,” i.e., may provide for a payment ofmultiple times the initial investment if the particular outcome to whichthe position related transpires). For example, U₁ may have placed thiswager at a cost of $10. At time T_(o), U₁ could, conceivably, sell thefinancial instrument 76 embodying this wager to another user, U₂, for$10. The wager has therefore become a financial instrument 76 whosevalue is based upon the course of the underlying probabilistic events210. If it as assumed that 100 spins of the roulette wheel take placeduring the relevant five hour period, the market value of U₁'s wager mayfluctuate with time, depending on the outcome of the underlying roulettewheel spins. Take, for example, the graph below of FIG. 5, whichillustrates three of a veritably infinite number of outcomes orpossibilities between T_(O) (point in time at which the wager is placed)and T₅ (the time at which the bettor has either won or lost; or, in thealternative, the time at which the wager is no longer “live”).

In regards to the graph of FIG. 5, one may observe various potentialoutcomes and infer their “real-dollar” significance to users.Possibility 1 (which merely denotes some outcome O_(MN)εO), shows atimeline in which during the first, second, third, and fourth hours, 20out of 20 roulette spins fall on red. At T₄, U₁ need only have 10 out ofthe 20 final spins land on red in order to win his wager. At T₄, U₁'swager, made at T_(O) for only $10, is arguably worth much more(especially to the extent that his wager “locked in” high odds, forinstance, if his position in the outcome was defined such thatoccurrence of the outcome would yield a payment of $500), becausestatistically the odds are now in his favor (50%). Based on theexemplary odds and interim outcomes just described, it would be expectedthat at T₄, U₁ could find a buyer willing to pay around $250, at least,for the financial instrument 76 held by U₁ and the present inventionprovides for a ready market for such transactions. At T₄, U₁ may electto either hold the financial instrument 76 or transfer it, as one wouldtransfer a futures contract, an option, or any such derivative marketinstrument, to another user, U₃, willing to buy. Thus, without having astake in the outcome of each individual spin of the roulette wheel, U₁is able to invest in some probabilistic event 210 based on a series ofroulette spins, and subsequently profit if he were to sell his financialinstrument 76 at T₄ to a willing buyer. In the exemplary graph shown,between T₄ and T₅, Possibility 1 concludes unfavorably for the bettor inpossession of U₁'s original wager because only 4 of the last 20 roulettespins result in red—the total being 84 red roulette spins over therelevant five-hour period. In such an instance, U₁ would have beenwell-advised to sell to U₃ at T₄ for, say, $250.

Similarly, Possibility 2 denotes another potential outcome within theset, O, of all possible outcomes. In Possibility 2, the period betweenT_(O) & T₄ is not as promising for U₁ as Possibility 1 began. InPossibility 2, there have been 75 red roulette spins at T₄. This meansthat U₁ needs a total of at least 15 out of 20 (75%) roulette spins tocome up red during the final hour. In this scenario, U1's originalfinancial instrument 76 may be worth little more, if not less, than hisoriginal investment. The odds are statistically against him (75%>50%).He may, as before, sell (perhaps at a loss), trade, or hold hisfinancial instrument 76. However, in the example given, between T₄ andT₅, 20 out of 20 roulette spins are red, providing a grand total of 95red spins during the relevant five-hour period, and providing a win orpayout to the holder of the financial instrument 76. As noted, whileexaggerated numbers and statistical outcomes have been chosen forillustrative purposes, it is believed that even in “real world” play,wherein the occurrence of red and black spins over time will rarely beexpected to skew heavily in favor of either color, the same principlesof volatility over time, and the same investment-strategizingopportunities for the holder or potential purchaser of a financialinstrument 76 prior to “maturity,” will apply.

Lastly, Possibility 3 illustrates a potential outcome in which U₁'sfinancial instrument 76 is worthless within two hours. During the firsthour (T₁), there are 5 red roulette spins. During the second hour (T₂),there are 7 red roulette spins. This yields a total of 12 out of thefirst 40 roulette spins as red. By T₂, it is impossible for a total of90 red roulette spins to be reached through the remaining spins in the100 spin duration.

Thus, the system creates novel financial instruments 76 and a market bywhich to facilitate the transfer of all such instruments 76. Individualclients 10 are able to hedge their wagers through various means, respondto market fluctuations accordingly, and freely exchange or transfertheir financial instruments 76 in any manner they see fit.

Example Financial Instruments

In a particular embodiment of the system 5, financial instruments 76 maybe grounded in the pull of slot machines. On each spin of the reels, acomputer device may be used to record the placement of a symbol inrelation to the “pay line” on each reel of each slot machine linked tosystem 5. For example, in conventional slot machines, the “pay line” maybe represented by a horizontal bar across the middle of the reeldisplay. Each position may be given a corresponding numerical valueaccording to a point system. For example, a cherry on the pay line mayrepresent 0, a cherry one line above the line may represent +1, and acherry one line below the line may represent −1; an orange on the payline may represent 3, an orange one line above the pay line mayrepresent 5, and an orange one line below the pay line may represent 1;no symbol on the pay line could represent −3, no symbol one line abovethe pay line could represent −1, and no symbol one line below the linecould be −5, etc. It should be noted that the point value assigned toeach possible outcome (e.g., “−5” for no symbol one line below the payline), could be arbitrarily chosen in the structuring of a particularproposition. In structuring the proposition for a particular instrument76, the party practicing the present invention might commonly—but is notrequired to—take into account estimated “actual” odds of a particularoutcome. E.g., the point value assigned to an orange in a particularposition might (but need not) reflect relative distributions of orangeson the respective slot machine reels.

Because the present invention provides for free trading of financialinstrument 76, though, it will be recognized that even random assignmentof point values to various outcomes could be made, and an efficientmarket still created, because market participants would be free toevaluate if the point value for a particular outcome had been fixed “toolow” or “too high” (in each case, vis a vis actual or perceivedmathematical odds of such an outcome), and could increase (or decrease)the amount they were willing to pay for participation in a positionwhose success depended in whole or in part on such outcome.

Each individual slot machine may be linked to central controller 50,which records and maintains an ongoing tally of the outcomes of eachevent 210. The ongoing tally may be displayed throughout the facility(casino or other facility), as well as in other locations, such as onclosed-circuit television in hotel rooms connected to the facility or onthe Internet. Since the point will be changing in real time as the slotmachines are used by patrons at the one or more locations, the displayof the point may be updated in real time or at predetermined intervals.This updated display can provide price guidelines upon which marketparticipants may value the instruments 76 and place transactions.Individuals may wager on whether the point will go higher or lower byeither buying or selling the associated financial instrument 76. Thevalue of the financial instrument 76 may be tied directly to the pointitself and move in unison, up or down, with the point.

Trades of financial instruments 76 may be made in various places in thefacility, including on the slot machine itself, at a kiosk or bettingwindow, and at other locations, by using a prepaid ATM-type card, asmart card, or other card representing established credit. The presentinvention may also facilitate trading outside the facility, such as incasino hotel rooms, on the Internet, via telephone, or otherwise. ATMcards, smart cards, and other known methods for tracking the initiationand timing of an electronic transaction may be used to record and tracka plurality of transactions for multiple players on a single point, orfor a single player as to multiple positions on a plurality of points.

Data regarding the status of a point, and its trading history and valueas between multiple clients 10, can be stored in memory 72 and displayedcentrally (e.g., using a web server or central computer), with access tosuch information being available centrally (for, e.g., the house'spurposes if the house is practicing the present invention) as well as toindividual market participants (through, e.g., distributed terminals,over a virtual private network, or over secured (or unsecured) internetservers). Provision of data security and integrity for remote access tosuch information may be provided in accordance with known security andencryption protocols, such as, e.g., 128 bit SSL protection for securedInternet communications.

Multiple “points” may be created on a rolling basis. For instance, eachnew spin of a slot machine may be viewed as beginning a new point, andinvestors may take positions as to any (or several) of multiple pointson a rolling basis. Computerized tracking of the points (and ofassociated financial instruments 76) can be readily provided usingaccount management software and platforms. Because clients 10 need notbe present in the facility while they have a position in a financialinstrument 76, they can essentially be gambling on slot machines (orpositions based upon outcome of slot machine transactions) anytime andfrom any location.

In various different embodiments according to the present invention, thepoint may run continuously 24-hours a day for unlimited duration, orinstead it may have a pre-defined time limit after which time alloutstanding financial instruments 76 are settled and a new pointthereafter begins. For instance, a point (point_(0day)) could beestablished at noon, January 1, and another point (point_(0week))established at the same time, with point_(0day) having pre-fixedduration of 24 hours and point_(0week) having pre-fixed duration ofexactly one week. Thus a pre-defined “settlement date” would be knownfor each point. The settlement date for point_(0day) would be noon,January 2, and the settlement date for point_(0week) would be noon,January 8.

“Settlement” or “outcome” of a financial instrument 76 associated with aparticular point could be defined in a number of user-customizable ways.Often it would be predefined. To take a simple example (based upon aposition in which the value of a financial instrument 76 is defined bymultiple spins of a roulette wheel, with “red” counting for −1, “black”+1, and “green” for 0), if the point were positive as of the settlementdate, a holder of a “black” or long position in that point (positioning)would win a particular amount of money. In particular embodiments, theamounts won could be a predefined amount, such as an amount equal to aninitial wager; an amount that varies according to particular odds thatare set for the underlying event of the financial instrument 76; or anamount that varies according to a spread-bet. Because it is possible tostructure both “short” and “long” positions, this simple exemplaryposition could also provide that if the point were negative as of thesettlement date, the holder of the “long” position would lose hisinvestment but a party who was “short” on the point would win based onsuch a negative point. “Positions” may be defined in a number offashions—

e.g., dollar-value units, shares, chips, or other units of proportionalparticipation could be used to reflect the amount of money (or theproportional share in the position outcome or payoff) that a particularinvestor has in play.

The above paragraph assumes a binary form of point, with the “payoff”structured as, e.g., a 1:1 payoff, reflecting roughly equal statisticalodds, for the “winning” and “losing” pointholder. Of course, it is alsopossible to structure “payoffs” for particular positions in points toreflect differential statistical odds. For instance, if a position(position_(green+90)) were structured wherein the point was defined asthe number of “green” outcomes (i.e., “0” s or “00” s in Americanroulette) in a roulette game over a period of one day, the payoff couldbe structured to provide that if the point were greater than, e.g., 90on the settlement date, the “long” player in that position would winfifty (50) times his initial position price, whereas if the point wereless than, e.g., 90 at settlement, the long player would lose hisinitial investment in the position.

The present invention also is readily adaptable for use with “spreadbetting” concepts. In such an embodiment, based for instance on thesimplest red/black-defined roulette point, a “long” investor who paid $Xfor his initial position as to point_(0day) would receive incrementallygreater (or, respectively, less) than $X in return as of the settlementdate based upon the amount by which the point (as of settlement date)was greater (or, respectively, less) than the initial point value. Thus,the investors in positions can benefit (or lose) proportionately (up toeither a predefined limit, or without limit) to the extent that actualpoint outcomes diverge from statistically-expectable “predicted”outcomes. Accordingly, at the time of settlement of the financialinstrument 76, the “long” investor would receive a payoff of $X for eachpoint above the initial point value at the time of settlement, orconversely would lose $X for each point below the initial point value atthe time of settlement.

Financial instruments 76 may also be structured in accordance with thepresent invention wherein the “payoff” to a holder is not a pure“predetermined” set payoff, nor a pure “spread bet” payoff, but ispartly or in whole a pari-mutuel payoff, wherein the holder as to afinancial instrument 76 in a particular outcome is paid, partly orwholly, based upon a pro rata division of the total amount wagered uponthe event or proposition and all its various outcomes, divided toreflect the number of position-holders who picked each respectiveposition.

Additionally, further positions in a point can be predefined so as toallow an investor to benefit (or lose) from significant divergences from“predicted” point outcomes. Thus, in the simple roulette example inwhich the point is defined by total ratio of red to black outcomes(which may be expected a priori to be roughly 1:1), an additionalposition (position_(0dayblack+50)), could be defined based on theproposition that, as of the settlement date, there will have been 150more black outcomes than red outcomes during the life of the point.“Payoff” on position_(0dayblack+150) could be determined as apre-determined value (e.g., a single payoff of $10 for each unit ofparticipation in a long position in that point), or on a “spreadbetting” basis. If the “payoff” for a long position inposition_(0dayblack+150) is defined in terms of a fixed dollar or othervalue (for instance, $10 for each unit of participation in theposition), then it can be expected that investors will discountaccordingly the amount of money they would be willing, a priori, to payfor such position.

However, perceived value of a financial instrument 76 will very oftenchange over time. To take the above example regarding a financialinstrument 76 in position_(0dayblack+150), if the payoff at settlementdate were pre-fixed as $10 for each unit of participation, it could beexpected that, at the very initiation of the point, investors would paysubstantially less than $10 for a unit of position_(0dayblack+150)—basedon their expectation that point0day would, at the settlement date, bewell below +150 (where red outcomes increment the point by −1, and blackoutcomes by +1), i.e., close to 0. However, if twenty three (23) hoursfollowing initiation of point_(0day), the instantaneous value of_(point0) were +175 (because blacks had exceeded reds by 175 outcomesduring the life so far of point0day), then investors would likely payvery close to $10 for a unit of position_(0dayblack+150), believing thatthere was an excellent chance that when point_(0day) closed in onefurther hour, point_(0day) would still be over +150.

The present invention allows for ready trading in financial instruments76, effectively in real time, over a platform or platforms. Investorscould also join sub-groups for competitive trading or tracking offinancial instruments 76, which sub-groups could be hosted as“communities” or “leagues,” either by the house, by a centralizedprovider of services pursuant to the present invention, or through avariety of related or unrelated third-party hosting services. In thisconnection, even when the house or other provider or tracker of pointvalues and position outcomes does not actually host all investors orplayers as to positions in points, the house or other provider couldprovide one or more of the following for use by remote players orleagues or communities of investors in positions: centralizedstatistical services, research services, historical position data,account hosting, and settlement services for trades in positions.

Current prices and other trading information, including results, can beposted on a website or stock ticker, and published in newspapers andbroadcast on television and radio stations, so players not in thefacility can follow the progress of their financial instruments 76. Allof the methods that are commonly used for transmitting stock price datain real time or near real time may be used to transmit informationregarding the current valuations of the financial instruments 76 createdin accordance with the present invention.

In other embodiments of the present invention, trading and investing maybe facilitated as to positions on a variety of casino games or otherpropositions wherein a player may seek to wager regarding the outcomesof particular events (or in which the player may gain or lose value in aproposition based on the nearness with which an actual outcome of aparticular event matches the outcome as to whose occurrence the playertook a position). Accordingly, the present invention could readily beadapted for trading positions on a rolling basis as to a large number ofcasino games (e.g., roulette, keno, craps, poker or other card games),as well as other propositions (e.g., outcomes of particular financialmarket events or values) wherein multiple participants may takepositions as to groups of events having uncertain outcomes.

The present invention may therefore be used in accordance with countlesstypes of wagers. These wagers may include, but are not limited to,straight “fixed odds” bets of any odds ratio, spread bets, fixedover/under bets, and range bets. The bets may be placed with respect to,for example, roulette results for a particular casino over some finiteperiod of time, or even for several casinos combined.

In another exemplary embodiment of the present invention, a system andmethod may be employed for creating financial instruments 76 inconnection with horse racing or other common sporting events that mayhave multiple participants, which are currently the subject ofpari-mutuel or other wagering propositions but could also be made thesubject of a tradable point-based wagering proposition. Financialinstruments 76 may be employed in numerous ways to establish aparticular position with respect to some aspect of the outcome of aseries of horse races, and the positions embodied in those instruments76 may be traded in the same way as any of the other instruments 76discussed herein.

In one exemplary embodiment of a system and method according to thepresent invention, the horses in a given race may be divided intogroups, most simply into two groups. The division into groups may beperformed on a random mathematical basis, based upon active handicappingby the house as to the estimated respective skill levels and probabilityof winning the race for each horse in the group, or by any other method.In the example in which the horses in a single race are broken into twogroups, the first group might be designated, e.g., the “+1” group, withthe second group being designated the “−1” group. Thus, a point iscreated in which investors may take a position on either side. Becauseodds in horse racing typically fluctuate up until the moment the racebegins, the financial instrument 76 could be traded, once bought, as theperceived odds of some or all of the horses in the given group rose orfell. In a multi-race embodiment, of course, opportunities for tradingthe financial instrument 76 over time would be even more extensive.There is no inherent limit to the number of races that can be combined(including races at remote locations), or the variety of ways in whichhorse groupings could be divided, in creating a rolling propositionwager embodied in a financial instrument 76 and tradable byparticipants.

The “win-lose”/payoff determination for the propositions that are madethe subject of positions in the present invention could also be measuredin a number of fashions. For example, the “winning” position on thepoint could correspond simply to that group of horses that contained thesingle winning horse in the relevant race(s); or could be defined as thegroup that contained the most horses that finished in the top threepositions (win, place, and show) in the race(s), etc.

This aspect of the invention could also be employed for pureparty-counter-party betting, in which the system serves solely as amarket for matching individual investors who are willing to takediametrically opposed positions on a particular point, or to trade insuch positions (with the house extracting a small service fee for itsclearinghouse functions). The point-setting and position-sellingmechanisms or options offered by the house could be varied in a widevariety of fashions to allow the house to be as “risk averse” or “risktolerant” (i.e., having some or all of the house's own money actively inplay and subject to unknown risk-based outcomes) as is desired.

In another exemplary embodiment of the present invention, a transferablefinancial instrument 76 may be created to embody yet another type ofwager, the subject of which may be real financial markets. As anexample, in one embodiment, the house may establish a point value basedon the closing value of a particular stock or group of stocks, such asthe Dow Jones Industrial Average (DJIA). A bettor may take a particularposition relative to that point as to the closing value of the DJIA overa period of days, months, or years. The value of the bettor's associatedfinancial instrument 76 will change with fluctuations in the DJIA andsubsequent changes in the point value. That position, via itscorresponding instrument 76, may be traded and transferred among clients10. The value of that position will fluctuate in accordance with thefluctuations in the stocks listed on the DJIA—a payoff may be structuredsuch that a holder of a financial instrument 76 embodying a “long”position will receive a payoff if the value of the DJIA is higher thanthe house's preset point value at the time of settlement. Moreover, ifthe financial instrument 76 embodies a point position that is favorablein relation to the house's set point position, the instrument 76 willpresumably be of greater value than at the time it was purchased, andaccordingly will command such higher value in trading, sale, or othertransfer of the financial instrument 76 between individual bettors.Other embodiments may be employed within the scope of this invention tocreate derivative financial instruments 76 which are based oninnumerable other aspects of financial markets worldwide.

As would be understood by one skilled in the art, the present inventionis not limited to the types of financial instruments 76 discussedherein, but may be implemented in accordance with a large variety ofcasino games, sporting events, financial markets, or any other eventshaving uncertain outcomes (e.g., the weather, election results, etc.).

Further, the present invention is compatible with a wide range ofcomputerized implementations, in particular with systems in whichfinancial instrument 76 may be traded electronically over the internetor World-Wide-Web (or in conjunction with telephone call centers inwhich telephone operators or computerized Interactive Voice ResponseUnits (IVRUs) perform computerized input of client-supplied information)so that global and round-the-clock real-time access to the bettingmarket is made possible in appropriately-secured form.

Those of ordinary skill in the art will appreciate that the foregoingdiscussion of certain embodiments and preferred embodiments isillustrative only, and does not limit the spirit and scope of thepresent invention, which are limited only by the claims set forth below.

1. A computer-implemented method for creating a financial instrument,comprising: identifying a wagering position taken on at least one spinof at least one roulette wheel; establishing a financial instrumentembodying the wagering position; receiving results of the at least onespin of the at least one roulette wheel; and settling the financialinstrument based at least in part upon the results.
 2. The method ofclaim 1, wherein the wager is based upon the number of roulette spinshaving either a red outcome or a black outcome.
 3. The method of claim1, wherein the wager is based upon the numeric outcome of the at leastone spin of the at least one roulette wheel.
 4. The method of claim 1,further comprising facilitating the transfer of the financial instrumentfrom a first client to a second client.
 5. The method of claim 1,further comprising: maintaining a point count that varies according tothe outcome of the at least one spin of the at least one roulette wheel;and determining a price based at least in part upon the point count;wherein the financial instrument is settled for the price.
 6. The methodof claim 1, further comprising: maintaining a point count that variesaccording to the outcome of the at least one spin of the at least oneroulette wheel; determining a price based at least in part upon thepoint count; and initiating the transfer of the financial instrument forthe price.
 7. A computer-implemented method for creating a financialinstrument, comprising: identifying a wagering position taken on atleast one spin of the reels of at least one slot machine; establishing afinancial instrument embodying the wagering position; receiving resultsof the at least one spin of the reels of at least one slot machine; andsettling the financial instrument based at least in part upon theresults.
 8. The method of claim 7, further comprising facilitating thetransfer of the financial instrument from a first client to a secondclient.
 9. The method of claim 7, further comprising: maintaining apoint count that varies according to the outcome of the at least onespin of the reels at least one slot machine; and determining a pricebased at least in part upon the point count; wherein the financialinstrument is settled for the price.
 10. The method of claim 7, furthercomprising: maintaining a point count that varies according to theoutcome of the at least one spin of the reels at least one slot machine;and determining a price based at least in part upon the point count; andinitiating the transfer of the financial instrument for the price.
 11. Acomputer-implemented method for creating a financial instrument,comprising: identifying a wagering position taken on at least one eventoccurring in at least one horse race; establishing a financialinstrument embodying the wagering position; receiving results of the atleast one event occurring in the at least one horse race; and settlingthe financial instrument based at least in part upon the results. 12.The method of claim 11, further comprising facilitating the transfer ofthe financial instrument from a first client to a second client.
 13. Themethod of claim 11, further comprising: maintaining a point count thatvaries according to the outcome of the at least one event; anddetermining a price based at least in part upon the point count; whereinthe financial instrument is settled for the price.
 14. The method ofclaim 1 1, further comprising: maintaining a point count that variesaccording to the outcome of the at least one event; and determining aprice based at least in part upon the point count; and initiating thetransfer of the financial instrument for the price.